Meanwhile, from 2021 the levy, which will be set much lower than its current rate, will only apply to UK rather than group balance sheets.

The levy in its earlier form had been seen as a key reason why HSBC, Europe’s biggest bank, said in April that it was considering relocation away from London and possibly back to Hong Kong where it originated. A large part of its business is focused on Asia.

Brokers at Investec estimate the changes announced by Mr Osborne will slash the lender’s bank levy charges of around 1.5 billion US dollars (£964 million) this year by 80 per cent by 2021.

HSBC said: “We are executing the actions that we announced at our investor update in June and our focus is on making significant progress during the remainder of the year.”